It’s often said that every crisis brings along with it many new opportunities besides its impending challenges.
The current Coronavirus crisis is likely to trigger several changes, and also redefine our businesses and customer behaviour in the following years. “As social distancing becomes the new normal, the economy will now embrace distancing as business proposition,” says Mr. Lav Chaturvedi, ED & CEO at Reliance Securities.
Consolidation in broking industry, investment opportunities opening up in several new sectors, preference for value and quality stocks along with greater interest among people about environment, global warming, and climate change are some of the changes that experts believe will mark India’s Capital Market industry and investor interest once the Coronavirus pandemic dies down.
Consolidation in broking industry India’s broking industry may see some serious consolidation either because of aggressive business model or unsustainable operating leverage. “Either way, there will be consolidation and optimization of industry players. Robust risk management and customer centricity would be key differentiator,” Chaturvedi says.
New investment hotspots
According to Mr. Vijay Bhushan, President, ANMI, the pharmaceuticals sector will be the biggest gainer in the months ahead. “This is not just because of the demand for drugs for treating COVID-19 but also because of general rise in demand for vitamins, paracetamol and other associated drugs,” he says.
While Mr. Chaturvedi sees consumer staples, Telecom, Healthcare and oil marketing as other emerging hotspots, Mr. Bhushan also includes banks and IT to the list.
“Based upon how quickly we come out of lockdown with calibrated lifting of restrictions, we may see healthy recovery in sectors like Retail, Hospitality, Cement, Paints, Automobile, and Specialty Chemicals etc,” Chaturvedi adds.
Preference for value and quality
As soon as COVID-19 crisis gets over, sectors which have been battered badly and have potential to revive faster will be lapped up by the investors.
“Investors will keep looking for better value proposition with low degree of uncertainty,” says Mr. Chaturvedi. He adds: “There are certain quality stocks that got hammered during the recent market correction but have the potential to generate hefty returns once the economy begins to stabilise and recover.”
Stocks like ICICI Bank, Maruti Suzuki, Hero MotoCorp and UltraTech Cement etc. can potentially generate relatively better returns in the large-cap space.
Interest in ESG sector to grow
With the huge rise in concerns about global warming, climate change impact etc across the world, there has been a growing investor interest in the ESG (environmental, social, and governance) sector.
Notably, there are dedicated onshore or offshore funds, which invest only on ESG stocks, as these stocks also carry relatively low regulatory interferences. “The Nifty ESG Index has been outperforming the benchmark Nifty for more than a year. We believe the ESG stock should continue to see traction and will grow in a big way post Covid-19,” Chaturvedi says.
